MNP3701 STRATEGIC
SOURCING FOR EXAM
PURPOSES
,STRATEGIC SOURCING
MNP3701
1
,Index Page #
CHAPTER 1 : INTRODUCTION TO PURCHASING AND SUPPLY CHAIN MANAGEMENT ........................................................... 8
Building Relationships And Driving Innovation
......................................................................................................... 8
Improving Quality And Reputation
..................................................................................................................... 8
Reducing Time To Market
.............................................................................................................................. 8
Managing supplier risk................................................................................................................................... 8
Generating Economic Impact
............................................................................................................................ 8
Contributing To Competitive Advantage
................................................................................................................ 8
UNDERSTANDING THE LANGUAGE OF PURCHASING AND SUPPLY CHAIN MANAGEMENT ...................................................... 8
Supply Chains And Value Chains ........................................................................................................................ 9
Emerging SCM Technologies .......................................................................................................................... 13
Figure 1: THE DEVELOPMENT OF PURCHASING INTO STRATEGIC SOURCING, AND THE EVOLUTION OF SUPPLY MANAGEMENT .. 14
CHAPTER 2: THE PURCHASING PROCESS ............................................................................................................ 15
Elements Of The Purchasing Process ................................................................................................................ 15
Purchasing Objective .................................................................................................................................. 15
Supply Market Intelligence ........................................................................................................................... 16
Reasons For Not Being Strategic .................................................................................................................... 16
Strategic Supply Management Roles And Responsibilities Purchasing Responsibilities ............................................................ 16
Purchasing Responsibilities ............................................................................................................................ 16
Improve The Procure-To Pay Process ............................................................................................................... 18
P2P process as a cycle consisting of six major stages: ............................................................................................ 18
EXHIBIT 2.3: THE PURCHASING PROCESS ....................................................................................................... 18
Benefits of Electronic Documents .................................................................................................................... 18
Improving the Procure-to-Pay-Process consists of: ................................................................................................ 19
1. Forecast And Plan Requirements ............................................................................................................ 19
2. Clarify Requisition Needs .................................................................................................................... 19
Approval, Contract, And Purchase Order Preparation .............................................................................................. 21
Consists of the following: ............................................................................................................................. 21
Types Of Purchases ................................................................................................................................... 22
Improving The Purchasing Process ................................................................................................................... 23
Purchasing Objectives Summary ...................................................................................................................... 23
STUDY UNIT 3: CHAPTER 4: SUPPLY MANAGEMENT INTEGRATION FOR COMPETITIVE ADVANTAGE ..................................... 24
Integration ............................................................................................................................................. 24
Supply Integration Defined ........................................................................................................................... 24
Elements of Supply Integration ...................................................................................................................... 24
Internal Linkages ...................................................................................................................................... 24
External Integration .................................................................................................................................. 24
External Linkages ...................................................................................................................................... 24
Buyer-Supplier Collaboration ......................................................................................................................... 25
EXHIBIT 4.2: CHARACTERISTICS OF THE BUYER-SELLER RELATIONSHIP .................................................................. 25
Advantages of Closer Relations ...................................................................................................................... 25
Figure 3.1: Characteristics of the three principle classes – transactional, collaborative and alliance buyer-seller relationships ............ 26
Obstacles to Closer Relationships .................................................................................................................... 26
Critical Elements for Supplier Relationship Management (SRM) ................................................................................... 27
The following skills are required for effectively managing buyer-seller relationships: .......................................................... 27
Critical Elements – “Little r” ......................................................................................................................... 27
2
, Effective SRM ......................................................................................................................................... 27
SRM Skills ............................................................................................................................................. 27
Cross-Functional Teams ............................................................................................................................... 27
Advantages/Benefits of Cross-functional teams .................................................................................................... 27
Disadvantages/Potential Drawbacks of Cross-Functional Team (CFTs) Approach ................................................................. 28
When to Form a CFT ................................................................................................................................. 28
Improving Sourcing Team Effectiveness ............................................................................................................. 28
Questions Driving Use of CFTs ....................................................................................................................... 29
Selecting A Task ................................................................................................................................... 29
Selecting Team Members And Leaders ........................................................................................................... 29
Resource Support ................................................................................................................................... 29
There are several ways that management can practice subtle management control .......................................................... 29
Integrating Supply Management, Engineering And Suppliers To Develop New Products And Services .......................................... 30
Common Themes For Successful Supplier Integration Efforts ..................................................................................... 30
Supplier Integration Into Customer Order Fulfilment .............................................................................................. 31
Supplier Suggestion Programs ............................................................................................ Error! Bookmark not defined.
Buyer-Supplier Improvement Teams ................................................................................................................. 31
On-site Supplier Representatives .................................................................................................................... 32
Buyer’s Use of On-Site Supplier Reps ............................................................................................................... 32
Potential Benefits Of On-Site Supplier Representatives ........................................................................................... 32
PART 3: STRATEGIC SOURCING ....................................................................................................................... 34
STUDY UNIT 4: CHAPTER 6: CATEGORY STRATEGY DEVELOPMENT ............................................................................. 34
Supply Policy and Strategies ......................................................................................................................... 34
Aligning Objectives .................................................................................................................................... 34
How Companies Create Shareholder Value ........................................................................................................... 34
Integrative Strategy Development ................................................................................................................... 34
Components of Integrative Strategy ................................................................................................................. 35
Engaging Stakeholders To Build Category Strategy Objectives .................................................................................... 35
What Is Category Strategy? ......................................................................................................................... 35
Difference Between Category Strategies And Strategic Sourcing ................................................................................ 36
Conducting A Spend Analysis ......................................................................................................................... 36
Spend Analysis Spreadsheet .......................................................................................................................... 36
Category Strategy Development/The Strategic Sourcing Process (MOST IMPORTANT) ........................................................ 36
THE STRATEGIC SOURCING PROCESS ............................................................................................................ 37
Step 1: Team and Project Charter .................................................................................................................. 37
Step 2: Conduct Market Research ................................................................................................................... 37
Porter’s Five Forces Model ........................................................................................................................... 37
SWOT Analysis ........................................................................................................................................ 39
Benchmarking Analysis ................................................................................................................................ 39
Requests for information (RFI) ....................................................................................................................... 39
Value chain analysis ................................................................................................................................... 39
Supplier research ...................................................................................................................................... 39
Step 3: Strategy Development ....................................................................................................................... 39
Portfolio analysis ...................................................................................................................................... 39
Step 5: Supplier Relationship Management (SRM) .................................................................................................. 43
3
SOURCING FOR EXAM
PURPOSES
,STRATEGIC SOURCING
MNP3701
1
,Index Page #
CHAPTER 1 : INTRODUCTION TO PURCHASING AND SUPPLY CHAIN MANAGEMENT ........................................................... 8
Building Relationships And Driving Innovation
......................................................................................................... 8
Improving Quality And Reputation
..................................................................................................................... 8
Reducing Time To Market
.............................................................................................................................. 8
Managing supplier risk................................................................................................................................... 8
Generating Economic Impact
............................................................................................................................ 8
Contributing To Competitive Advantage
................................................................................................................ 8
UNDERSTANDING THE LANGUAGE OF PURCHASING AND SUPPLY CHAIN MANAGEMENT ...................................................... 8
Supply Chains And Value Chains ........................................................................................................................ 9
Emerging SCM Technologies .......................................................................................................................... 13
Figure 1: THE DEVELOPMENT OF PURCHASING INTO STRATEGIC SOURCING, AND THE EVOLUTION OF SUPPLY MANAGEMENT .. 14
CHAPTER 2: THE PURCHASING PROCESS ............................................................................................................ 15
Elements Of The Purchasing Process ................................................................................................................ 15
Purchasing Objective .................................................................................................................................. 15
Supply Market Intelligence ........................................................................................................................... 16
Reasons For Not Being Strategic .................................................................................................................... 16
Strategic Supply Management Roles And Responsibilities Purchasing Responsibilities ............................................................ 16
Purchasing Responsibilities ............................................................................................................................ 16
Improve The Procure-To Pay Process ............................................................................................................... 18
P2P process as a cycle consisting of six major stages: ............................................................................................ 18
EXHIBIT 2.3: THE PURCHASING PROCESS ....................................................................................................... 18
Benefits of Electronic Documents .................................................................................................................... 18
Improving the Procure-to-Pay-Process consists of: ................................................................................................ 19
1. Forecast And Plan Requirements ............................................................................................................ 19
2. Clarify Requisition Needs .................................................................................................................... 19
Approval, Contract, And Purchase Order Preparation .............................................................................................. 21
Consists of the following: ............................................................................................................................. 21
Types Of Purchases ................................................................................................................................... 22
Improving The Purchasing Process ................................................................................................................... 23
Purchasing Objectives Summary ...................................................................................................................... 23
STUDY UNIT 3: CHAPTER 4: SUPPLY MANAGEMENT INTEGRATION FOR COMPETITIVE ADVANTAGE ..................................... 24
Integration ............................................................................................................................................. 24
Supply Integration Defined ........................................................................................................................... 24
Elements of Supply Integration ...................................................................................................................... 24
Internal Linkages ...................................................................................................................................... 24
External Integration .................................................................................................................................. 24
External Linkages ...................................................................................................................................... 24
Buyer-Supplier Collaboration ......................................................................................................................... 25
EXHIBIT 4.2: CHARACTERISTICS OF THE BUYER-SELLER RELATIONSHIP .................................................................. 25
Advantages of Closer Relations ...................................................................................................................... 25
Figure 3.1: Characteristics of the three principle classes – transactional, collaborative and alliance buyer-seller relationships ............ 26
Obstacles to Closer Relationships .................................................................................................................... 26
Critical Elements for Supplier Relationship Management (SRM) ................................................................................... 27
The following skills are required for effectively managing buyer-seller relationships: .......................................................... 27
Critical Elements – “Little r” ......................................................................................................................... 27
2
, Effective SRM ......................................................................................................................................... 27
SRM Skills ............................................................................................................................................. 27
Cross-Functional Teams ............................................................................................................................... 27
Advantages/Benefits of Cross-functional teams .................................................................................................... 27
Disadvantages/Potential Drawbacks of Cross-Functional Team (CFTs) Approach ................................................................. 28
When to Form a CFT ................................................................................................................................. 28
Improving Sourcing Team Effectiveness ............................................................................................................. 28
Questions Driving Use of CFTs ....................................................................................................................... 29
Selecting A Task ................................................................................................................................... 29
Selecting Team Members And Leaders ........................................................................................................... 29
Resource Support ................................................................................................................................... 29
There are several ways that management can practice subtle management control .......................................................... 29
Integrating Supply Management, Engineering And Suppliers To Develop New Products And Services .......................................... 30
Common Themes For Successful Supplier Integration Efforts ..................................................................................... 30
Supplier Integration Into Customer Order Fulfilment .............................................................................................. 31
Supplier Suggestion Programs ............................................................................................ Error! Bookmark not defined.
Buyer-Supplier Improvement Teams ................................................................................................................. 31
On-site Supplier Representatives .................................................................................................................... 32
Buyer’s Use of On-Site Supplier Reps ............................................................................................................... 32
Potential Benefits Of On-Site Supplier Representatives ........................................................................................... 32
PART 3: STRATEGIC SOURCING ....................................................................................................................... 34
STUDY UNIT 4: CHAPTER 6: CATEGORY STRATEGY DEVELOPMENT ............................................................................. 34
Supply Policy and Strategies ......................................................................................................................... 34
Aligning Objectives .................................................................................................................................... 34
How Companies Create Shareholder Value ........................................................................................................... 34
Integrative Strategy Development ................................................................................................................... 34
Components of Integrative Strategy ................................................................................................................. 35
Engaging Stakeholders To Build Category Strategy Objectives .................................................................................... 35
What Is Category Strategy? ......................................................................................................................... 35
Difference Between Category Strategies And Strategic Sourcing ................................................................................ 36
Conducting A Spend Analysis ......................................................................................................................... 36
Spend Analysis Spreadsheet .......................................................................................................................... 36
Category Strategy Development/The Strategic Sourcing Process (MOST IMPORTANT) ........................................................ 36
THE STRATEGIC SOURCING PROCESS ............................................................................................................ 37
Step 1: Team and Project Charter .................................................................................................................. 37
Step 2: Conduct Market Research ................................................................................................................... 37
Porter’s Five Forces Model ........................................................................................................................... 37
SWOT Analysis ........................................................................................................................................ 39
Benchmarking Analysis ................................................................................................................................ 39
Requests for information (RFI) ....................................................................................................................... 39
Value chain analysis ................................................................................................................................... 39
Supplier research ...................................................................................................................................... 39
Step 3: Strategy Development ....................................................................................................................... 39
Portfolio analysis ...................................................................................................................................... 39
Step 5: Supplier Relationship Management (SRM) .................................................................................................. 43
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